Believe it or not, there once was a time when working at an enterprise software company was the most exciting thing you could do in the Valley. In the late ’80s, Oracle and Sun had the same popularity that Facebook has today. So I’m told. But with the invention of the Web browser and the Internet hitting global scale, working for a consumer technology company became the cool thing to do. That part I’m absolutely sure about.
Yahoo, ebay, and Amazon were where the action was in the ’90s. Then in the 2000s, the power and popularity shifted to Facebook, Google, Twitter, and hundreds of other social and media properties. The VC dollars have been flowing into consumer Internet plays at an ever-growing rate, thanks to the alluring speed, scale, and simplicity with which consumer products get to market It’s almost as if investing in enterprise software became as boring as using it. And certainly as tedious – breaking into the enterprise market has traditionally been a hard, slow process. The magnitude of sales, relationships, and patience necessary to succeed were vastly at odds with the VC model. Well, this has all changed.
Enterprise software is definitely hot again. At Box, we think there’s no better time to join an enterprise software startup. And fine, if you don’t want to work for one of the emerging players, feel free to use this list as a way to rationalize starting an enterprise software company of your own:
1. Things in the enterprise are different now
Nearly every factor that used to limit the potential and scale of enterprise software startups has been alleviated. Budgets? They’re coming back. Distribution? It’s vastly more efficient. Three-year product cycles? Huh? Try weekly updates. In 2011, delivering your service over the Web means you can iterate and control your destiny more than ever before. Microsoft used to be able to box out any emerging players with their integrated stack and copious marketing dollars. And getting to customers was an impossibly obtuse process – with the cloud, far less brute force is now required, just brilliant product execution.
There’s also simply way more ground to cover. With more than 25 million iPads and 100 million iPhones in the mix this year, big data getting increasingly bigger, and a veritable data explosion, there are glaring, growing gaps in the offerings of today’s legacy vendors. And once these new enabling technologies or demands are fully realised, we’ll see entirely new derivative opportunities in the enterprise. We now have way bigger problems to solve and much better tools to solve them, and enterprises are finally back in the buying seat. Topping it off, emerging enterprise software companies just tend to suck much less than their predecessors.
2. Change the world, really
You know what activity doesn’t dominate most people’s time? Taking pictures of friends and identifying your location using only the sound in the room. Or hourly purchases of coupons. What does take up a disproportionate amount of everyone’s day is sitting at work, trying to get their job done. And most of the time they hate the technology they’re using – they hate it because it slows them down when turning their dreams into reality.
Workers at Boeing are building the aircraft we all take for granted flying in. At Paramount, they’re making the movies that entertain us. They’re building cars at Audi that we all aspire to own, while NASA scientists are discovering and exploring new planets. Why not help these companies accomplish these goals and efforts faster? hat’s really what enterprise software and technology is all about it, whether it’s as horizontal as content sharing with Box, or as specialised as Palantir’s analytics platforms for government intelligence. And in Silicon Valley – or wherever you are – our job is to make the software and technology that will help these companies do their work efficiently, more creatively, and with less frustration.
3. A business model that is about more than harvesting virtual crops
In the consumer Internet, the goal is to drive vast page views, for the hope of then selling those “eyeballs” to advertisers at a premium. This is all well and good when you’re Facebook or the Web’s hottest bird-meets-enemy game, but if those eyeballs or credit cards go don’t show up or get diverted elsewhere (which they always seem to do), things can get pretty tough. And even when the clicks or views do start to appear, there’s still an unusual disconnect between you and your customer: as someone once said, if you’re not paying for it, you are the product.
Not so in the enterprise. One of the most gratifying benefits of building enterprise software is your relationship with customers. While every Internet startup on the planet claims to be customer-focused, there’s nothing that forces you to be more client-centric than having your survival depend on the ultimate value your technology creates for customers. In the enterprise software world – or at least in the new version of it – we live and die by our ability to generate substantial utility for businesses globally. If we don’t do this right, we don’t get paid, and this explicit relationship makes our jobs extremely focused and deliberate.
Best of all, enterprises also have a budget for what you’re building. Enterprises worldwide spend over $268 Billion every year on software solutions, and if you’re doing things right, you’re on somebody’s budget. Solve large enough problems, and you’ll find that generating revenue may become the least of your worries. Markets also tend to break out much more granularly than in the consumer world, allowing for stronger differentiation and customer focus. Who knew marketing automation, better billing software, HR for mid-sized enterprises could produce billion-dollar businesses? Well, Marketo, Zuora, and Workday are quickly finding this out.
4. You get to build for scale
One of the misconceptions about enterprise software is that you can’t have a large enough impact, or the size of the audience is too limited to warrant the costly effort. While this can be true in certain markets, enterprise technology tends to permeate all of our lives in some meaningful way. With an estimated 30-50M ‘knowledge workers’ – those of us that tend to punch into keyboards for a living – in the US alone, there are extremely large markets for most technologies. And by maintaining simplicity in design and function but allowing for powerful integrations, today’s new enterprise software companies are more horizontal and flexible than ever before.
Furthermore, enterprise software can now take advantage of the same distribution and adoption dynamics that consumer Internet companies have long had. With individuals, teams, groups, and businesses adopting technology right through their browser, enterprise tools can reach tens of millions of users in just a matter of years. And because cloud-delivered solutions like Box, Yammer, Zendesk and GoodData are inherently global on day one – and often support the needs of both SMBs and large enterprises simultaneously – we’re seeing an order of magnitude increase in market sizes and opportunities for new software entrants.
5. Go up against the big guy: everyone likes a good “David and Goliath” fight
If the first four reasons to join or start an enterprise software company weren’t reason enough, how about some good old fashioned competitive lust? Like to make markets more efficient, solve problems faster for people, or deliver technology in a cheaper or revolutionary fashion? Enterprise software offers you all this and more. Many of the legacy enterprise software and hardware vendors have been slow to transition to the cloud, embrace social technologies, and open up their platforms. These all represent market opportunities where the “little” guy can focus acutely on the new and demanding challenges that enterprises are facing. You’ll liberate workers, save businesses money, and do your part in driving the innovation cycle further. Consider your work philanthropic.
We’re in the midst of closing a whole chapter of computing with the dust already settling in on the client-server era. The opportunities are endless for enterprise startups, and the gaps are widening – creating even more incentive to jump in now. With the tremendous upside in the enterprise software market, you’d be crazy to not join us.